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Hong Kong Reviews Insider Information Disclosure Regime

by Mary Swire, Lowtax.net, Hong Kong
10 January, 2014

Following implementation of Hong Kong's statutory disclosure regime on January 1, 2013, the Securities and Futures Commission (SFC) has noted that listed companies have become more vigilant in identifying and disclosing information in a timely manner over the past year.

The regime, under the Securities and Futures (Amendment) Ordinance 2012, was intended to bring Hong Kong's regulatory regime for listed corporations more in line with other international financial centers and enhance Hong Kong's strength as a premier capital formation platform.

Listed corporations must now disclose price sensitive information (PSI) to the public in a timely manner. Compared with previous listing rules, the statutory regime provides clearer PSI disclosure requirements, with obligations and safe harbours explicitly set out in the law, and backed by civil sanctions for non-disclosure.

In 2013, corporate announcements about inside information increased by 52 percent and profit alerts and warnings went up 16 percent, compared to the previous year. Other than inside information, more announcements (an increase of 48 percent) provided regular updates on companies' trading performance, such as monthly sales figures, production volumes and other key performance indicators.

"We commend listed companies' initiatives to issue regular updates on their trading performance to enhance transparency," said Ashley Alder, the SFC's Chief Executive Officer. "As a matter of good practice, companies should publish trading information on the Hong Kong stock exchange news website and their own websites as this will help to ensure that all investors are aware of this important information."

"We would like to remind companies that they still have an obligation to consider whether any information is inside information that is likely to have a material impact on the share price," he added. "If it is, then companies must issue an announcement containing all information necessary for investors to make an informed decision, in addition to publishing regular trading information, as soon as reasonably practicable."

The SFC is continuing its endeavours to work with listed companies to enhance disclosure standards. It posted today additional frequently asked questions on its website, which advise companies to disclose relevant directors' dealings when making an unusual price and trading volume announcement under the Listing Rules of the Stock Exchange of Hong Kong Limited, and also address issues concerning disclosure obligations in relation to a statutory enquiry or investigation.

A comprehensive report in our Intelligence Report series giving a country-by-country analysis of offshore investment funds, stock exchanges and trusts, with an analysis of the US QI regime, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report9.asp

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